For centuries people have been putting pen to paper to solidify all manner of agreements. The need for contracts to provide transparency and alignment has been a fundamental pillar of our society for centuries, and they have always been a store of immense value whether carved into stone tablets or printed on office paper. However, as time has gone on and technology has evolved, the need to use pen and paper specifically for crafting and signing contracts has faded.
What is a wet signature?
A wet signature (or ‘wet ink’ signature) is when a person signs their name to a physical paper document by pen. This is what most people think of when they think of signing a contract.
The term ‘wet’ is traced back to when the ink or wax used to sign the document required time to dry.
Typically in business it’s only once a signature is affixed to a contract that the agreement is enforceable. Until recently, signing a contract would mean either all signers (including your counterparty) would need to be in a room together to put pen to paper, or contracts would have to be signed internally then couriered to the counterparty for them to sign, and then returned via the same means for storage.
With contracts being used more frequently by more people in the business, this formal process is not only time consuming, but also stifles the business’s ability to scale,grow and deliver value.
Thankfully, due the evolution of technology over the last 20 years, many jurisdictions have legislated that alternatives such as e-signature hold equivalent validity to traditional wet signatures.
These alternatives not only allow contracts to be executed wherever signers are, they also enable signing parties to realise efficiency gains by replacing wet signatures with digital e-signatures.
What is e-signature?
Electronic signatures, or e-signatures, are digital representations of signatures which can be attached to documents as a marker of assent to the document’s terms.
E-signatures hold equal weight and are just as legally binding as wet signatures. However, in some jurisdictions and circumstances, wet ink signatures are still required, such as when signing deeds.
Can e-signature replace wet signature?
Many businesses and individuals are making the switch to e-signatures for their everyday contracts, particularly when their signing parties are not available to sign in person together. This enables the contract details to commence sooner without the time lag required to print, sign, and send the document to the counterparty, then receive and scan and store the returned signed contract .
E-signature can replace wet signatures for almost all documents. Including:
Why consider an e-signature over a wet signature?
While wet ink signatures have been used consistently throughout history, they are not the most efficient method of contract execution. What’s more, waiting for a wet signature can pose risks and challenges to all parties. These include:
Slower turnaround times
The biggest challenge faced with wet ink signatures is the lengthy wait steps.
Contracts are typically workshopped and typed on a computer, then printed and delivered to signing parties for their wet signature. When all this lag time is added up (plus the time to send the contract back to it’s originator to be scanned and filed for safekeeping) it can add days if not weeks before the contract cycle is complete.
Waiting for a paper contract to be signed with a wet ink signature can take anywhere from a few hours to a couple of weeks once you factor in delivery services, couriers, business days, and holiday schedules.
Unfortunately, this drag only increases the more contracts you need to sign and send.
The cost associated with wet ink signatures hits your bottom line harder than you might think.
Aside from the additional stationary purchases and courier costs that come with wet ink signatures, businesses must also consider the cost of lost revenue from contracts that take too long to get to (and be returned from) your client.
Similarly, the cost of lost productivity from the delay in new hires receiving their employment agreements in a timely manner poses a lag in overall business growth.
In both these cases, a contract that takes too long to arrive is extra time where your client or new starter can be approached by your competitors.
What needs to happen to get your counterparty to sign your contract?
If you’re not personally delivering the contract to your counterparty, you are relying on them to have all the tools available to print, sign, scan and return the contract back to you.
If you’re relying on a courier to deliver the contract, you’re at the mercy of an entirely new stakeholder whose interests may not be aligned to either you or your counterparty.
Challenges with storage and searchability of contracts
Most businesses are run using digital documents and storage systems. A challenge of paper contracts and wet ink signatures is that these documents are usually either stored in physical filing cabinets (meaning your most important documents are not easily retrieved in an emergency), or someone in the business is required to scan and file the contract within the company’s digital storage system.
Can you use Plexus Gateway for e-signature?
The DocuSign e-signature integration allows your Legal departments plus the wider business to upload and execute documents, and even run them through complex approval workflows. You can then set customisable reminders for contract milestones to ensure they never miss an expiry or opportunity to negotiate a renewal.
What’s more, all signed contracts are then stored within Plexus Gateway, giving the business a single source of truth for their contract, plus a full audit trail.